Allied Systems, the nation’s largest car hauler, has emerged from bankruptcy with help from a private-equity firm and the Teamsters union, the Louisville Courier-Journal reported today. Investment firm Yucaipa Cos. will control the new company. Under the reorganization plan, the Teamsters agreed to 15 percent wage cuts for the next three years. During that period, Allied will not be allowed to offer raises to any of its nonunion employees. If the wage cuts result in more than $35 million in savings per year to Allied, it will reimburse the difference to its drivers.

Three weeks after denying Wachovia Bank NA’s request to lift the stay in Delphi Corp.’s bankruptcy case in order to pursue a breach of contract suit against a Delphi employee, Judge Robert Drain on Tuesday filed an amended bench ruling reasserting his opinion Bankruptcy Law360 reported yesterday. Judge Drain reaffirmed that Delphi’s stay extended to its employee Larry Graves, protecting him against a suit filed by Wachovia in Mississippi state court. Judge Drain also refused to lift the stay in order to allow Wachovia to continue its suit against Graves.

U.S. Energy Biogas Corp. (USEB) said that the judge overseeing company’s bankruptcy agreed on Wednesday to confirm the company’s reorganization plan, Bankruptcy Law360 reported yesterday. USEB said that it is poised to exit bankruptcy on May 31, adding that the U.S. Energy Systems Inc. subsidiary will pay its creditors in full and emerge from chapter 11 after only six months in bankruptcy. The company saw liabilities of more than $200 million knocked down to less than $110 million in the course of its bankruptcy proceedings. In March, the Illinois Commerce Commission (ICC) and USEB struck a deal under which a $5.25 million one-time payment from USEB was swapped for $63 million in balance-sheet liabilities stemming from an ICC loan.

ASC Inc. is looking to continue a pre-bankruptcy incentive plan that would award key executives and managers at least $1.2 million if they successfully sell the company’s assets, the Associated Press reported yesterday. The struggling maker of automobile sunroofs said on Friday that the incentive bonuses will motivate upper management to hunt down the best possible offer for the assets. ASC, based in Southgate, Mich., is looking to sell its closed manufacturing plants through a chapter 11 auction. The company has asked Judge Thomas J. Tucker to approve the bonuses, which will be based on a percentage of the proceeds from the sale of four shuttered Michigan properties, in Gibraltar, Southgate, Lansing and Livonia.

A federal bankruptcy judge has approved Granite Broadcasting Corp.’s reorganization plan, paving the way for the bankrupt media company to exit chapter 11 under the control of hedge fund Silver Point Capital, Bankruptcy Law360 reported yesterday. Under the terms of the approved plan, Silver Point traded about $295 million in a debt-for-equity swap in exchange for control of Granite. The plan provides that Granite’s secured holders will receive $200 million in new secured notes, with the balance of their debt to be converted into substantially all of Granite’s new equity. Unsecured creditors will receive a 100 percent recovery subject to a cap of $11 million on the total amount of all allowed unsecured claims, while the holders of preferred equity will receive approximately 2 percent of the new equity and warrants and the holders of common stock will receive a pro rata share of 1 percent of Granite’s new equity plus warrants.

In its efforts to emerge from chapter 11 bankruptcy, the Diocese of Davenport will sell a farm in eastern Iowa for $310,000, the Associated Press reported on Saturday. The sale will be considered for approval at a court hearing May 30, though the church can consider other offers on the property and two others it already agreed to sell last month. The diocese has yet to reach a decision on whether to sell the chancery, which has an assessed value of more than $2 million.

Collins & Aikman Corp. has sued its former chief executive, David Stockman, and the private-equity firm that helped him take control of the auto-parts company in 2001, saying they enriched themselves by inflating earnings and sending the company on a disastrous “acquisition spree,” the Wall Street Journal reported today. The lawsuit, filed Wednesday in U.S. District Court in Wilmington, Del., echoes criminal complaints filed against Stockman and some other executives. It accuses him and several other former executives and directors of fraud and mismanagement. It also alleges malpractice by Collins & Aikman’s auditors, saying they turned a “blind eye” to signs of accounting improprieties at the company. It seeks to force Heartland Industrial Partners, the $1 billion private-equity firm Stockman founded, to return an unspecified amount in fees and other benefits it collected as a result of the acquisition binge.

The United Automobile Workers union said that DaimlerChrysler and Cerberus Capital Management, which is buying the Chrysler Group, have agreed to invest $1.2 billion in the pension fund of Chrysler workers under terms of the sale, the New York Times reported today. The $7.4 billion deal, announced Monday, calls for Daimler to pay Cerberus $677 million as part of the transaction, which ends a nine-year merger between the German and American companies. Cerberus agreed to invest $5 billion in Chrysler over the next five years and is taking responsibility for Chrysler’s $18 billion liability for its workers’ health care benefits and pension obligations. The union’s pension plan is overfunded by about $2 billion, UAW president Ron Gettelfinger said. “Additionally, Cerberus has committed to contributing an additional $200 million to the pension fund and Daimler is providing a conditional guarantee of $1 billion for up to five years.”

Responding swiftly to objections of Northwest Airlines Corp.’s strategy for exiting bankruptcy, a creditors’ group has thrown its weight behind the plan, saying the carrier is poised to emerge a healthy and viable company, Bankruptcy Law360 reported yesterday.The unsecured creditors’ committee insisted that the airline’s controversial management equity plan (MEP), which has raised a storm with Northwest’s union workers, was both reasonable and “necessary to ensure the retention of the debtors’ talented management team.” Northwest filed its disclosure statement on Feb. 15, estimating the airline’s post-bankruptcy value at $6.45 to $7.55 billion and promising its unsecured creditors up to 83 percent of their claims before allocation of stock options under the MEP. The MEP sets aside 7.7 percent of the reorganized debtors’ equity for distribution to 5,200 employees in the form of 8 million shares of restricted stock units and another 5.5 million in stock options to Northwest directors, managing directors and officers. Under the plan, a further 1.6 million shares would be granted to top employees below the director level and 6 million shares would be kept in reserve for future employees. Opponents of the MEP, which include the airline’s unionized workers, claim the equity awards are excessive and that the plan breaches the Bankruptcy Code.
Chapter 7 Bankruptcy

Officials in the resort town of McCall, Idaho, plan to announce today whether they plan to file for bankruptcy protection after a series of losing court battles involving the construction of a wastewater treatment facility, the Associated Press reported today. U.S. District Judge B. Lynn Winmill late last month ordered the city to immediately pay $6 million. “We don’t have the cash,” Mayor Bill Robertson said. “What the judge is trying to extract is three times more than our tax revenue.” In 1995, the U.S. Environmental Protection Agency ordered the city to stop pumping its treated wastewater into the Payette River. After getting financing, the city in 2000 chose St. Clair Contractors, Inc., to build a storage facility for the city’s treated wastewater. Employers Insurance of Wausau provided bonding to St. Clair on the project. The city decided to hold St. Clair in default in 2001, saying the facility wasn’t complete under terms of the contract. Wausau completed the project but challenged the city’s decision to hold St. Clair in default. The city decided to hold Wausau in default of the contract and refused to accept the facility. The city then hired Contractors Northwest, Inc., to complete the facility, and it has been operating since 2002. Lawsuits started in 2001, with Wausau suing the city and St. Clair. St. Clair sued McCall. The city filed counterclaims against both companies.